1999 (5) TMI 130 - AT - Central Excise

Tribunal overturns duty recovery decision, classifying chemical products as medicaments. Importance of accurate classification and limitation period.

The Tribunal allowed the appeal, setting aside the Collector's decision to recover duty and impose a penalty on the assessees for alleged ... Demand - Limitation Issues: Classification of chemical products under medicaments for duty exemption, imposition of penalty for alleged duty evasion, misrepresentation by the assessees, applicability of exemption notifications, role of Assistant Collector in approving classification lists, limitation period for duty recovery.In this case, the appellants filed a classification list claiming duty exemption for 10 chemical products under sub-heading 3003.30 as medicaments. The approved list allowed duty-free clearance of these goods from 1-4-1988 to 30-11-1988. However, a notice issued in 1993 sought to recover duty and impose a penalty alleging that the products were organic chemicals falling under a different heading, not medicaments. The Collector confirmed the demand and imposed a penalty of Rs. 10,000 on the assessees, leading to this appeal.The definition of medicaments under Note 2 to Chapter 30 was crucial in determining the classification. The assessees cited part (a) of the definition but not part (b) in their classification list. The products listed by the assessees were approved by the Assistant Collector based on the claimed classification. The assessees argued that they genuinely believed the products were mixed or compounded, citing a Tribunal judgment emphasizing the Assistant Collector's active role in verifying classification accuracy. The Tribunal held that the charge of misrepresentation was not established, and the demand was barred by limitation, leading to the setting aside of the order and allowing the appeal with consequential relief.The case highlighted the importance of accurate classification in claiming duty exemptions and the need for thorough verification by the Assistant Collector. The Tribunal's interpretation of misrepresentation and the significance of the limitation period in duty recovery were crucial in determining the outcome of the appeal. The judgment emphasized the need for active decision-making by the authorities involved in approving classification lists to avoid disputes and penalties related to duty evasion allegations.